[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 443 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 443

   To amend part A of title XVIII of the Social Security Act to deny 
  Medicare payment with respect to non-profit hospitals that transfer 
       assets or control to for-profit entities without approval.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 9, 1997

 Mr. Stark (for himself, Mr. Filner, Mr. Kennedy of Rhode Island, Mr. 
  Brown of Ohio, Mr. Waxman, Mr. McDermott, and Mr. Lewis of Georgia) 
 introduced the following bill; which was referred to the Committee on 
                             Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To amend part A of title XVIII of the Social Security Act to deny 
  Medicare payment with respect to non-profit hospitals that transfer 
       assets or control to for-profit entities without approval.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Nonprofit Hospital 
Protection Act of 1997''.

SEC. 2. DISQUALIFICATION FROM MEDICARE PAYMENT OF NON-PROFIT HOSPITALS 
              THAT TRANSFER ASSETS OR CONTROL TO A FOR-PROFIT ENTITY 
              WITHOUT APPROVAL.

    (a) In General.--Part A of title XVIII of the Social Security Act 
is amended by adding at the end the following new section:

   ``disqualification of certain nonprofit hospitals from payment if 
 assets or control transferred to a for-profit entity without approval

    ``Sec. 1821. (a) Requirement.--No payment may be made under this 
part with respect to inpatient hospital services of a hospital if the 
hospital, on or after January 7, 1997, was owned or controlled by a 
nonprofit entity and there is an impermissible transfer (as defined in 
subsection (b)) with respect to the hospital or the entity.
    ``(b) Impermissible Transfers.--
            ``(1) In general.--For purposes of this section, the term 
        `impermissible transfer' means any covered transfer (as defined 
        in paragraph (2)) that has not been considered to be approved 
        in accordance with subsection (c).
            ``(2) Covered transfer defined.--For purposes of this 
        section, the term `covered transfer' means, with respect to a 
        hospital that is owned or controlled by a nonprofit entity--
                    ``(A) the sale, transfer, lease, exchange, option, 
                conveyance, or other disposition of, the assets of the 
                hospital (or of the entity in relation to the hospital) 
                to a for-profit entity, if a material amount of the 
                assets relating to the hospital are involved in such 
                disposition; or
                    ``(B) the transfer of control, responsibility, or 
                governance of a material amount of the assets or 
                operation of the hospital (or of the entity in relation 
                to the hospital) to any for-profit entity.
        Transfers described in this paragraph may be effected through 
        sale, joint venture, joint operating agreement, or any other 
        means.
            ``(3) Other definitions.--For purposes of this section:
                    ``(A) The term `acquired hospital' means, with 
                respect to a covered transfer, the non-profit hospital 
                the assets or control of which are the subject of the 
                transfer.
                    ``(B) The term `acquiring entity' means, with 
                respect to a covered transfer, the for-profit entity 
                that is involved in the transfer.
    ``(c) Conditions for Approval.--Subject to subsection (d)--
            ``(1) In general.--A covered transfer with respect to an 
        acquired hospital owned or controlled by a nonprofit entity is 
        not considered to be approved in accordance with this 
        subsection unless--
                    ``(A) the acquiring entity has disclosed to the 
                Secretary, in a form and manner specified by the 
                Secretary, the information described in paragraph (2) 
                relating to the transfer;
                    ``(B) there has been an independent fairness review 
                conducted of the proposed transfer and the report on 
                the review concludes that no assets of the acquired 
                hospital in relation to the nonprofit entity have 
                inappropriately benefited any private parties; and
                    ``(C) the Secretary has approved the transfer.
            ``(3) Information to be disclosed.--The information 
        described in this paragraph is a complete description of the 
        terms of covered transfer, together with a description of all 
        collateral arrangements, including information describing--
                    ``(A) the acquired hospital and the nonprofit 
                entity that owns or controls the hospital;
                    ``(B) the acquiring entity;
                    ``(C) other parties to the transfer;
                    ``(D) terms of the proposed transfer;
                    ``(E) the value of consideration to be provided in 
                connection with the transfer (including details as to 
                the basis for the valuation);
                    ``(F) copies of documents relating to the transfer;
                    ``(G) the identity of individuals and persons who 
                are officers, directors, or affiliates of the nonprofit 
                entity and whether they have any direct or indirect 
                economic interest in the transfer (including any 
                promise or discussion of future employment); and
                    ``(H) such other information as the Secretary may 
                require.
            ``(3) Public disclosure.--The Secretary shall provide for 
        public disclosure (including disclosure through electronic 
        means on the Internet) of information described in paragraph 
        (3) provided under paragraph (1)(A) and the report on the 
        transfer described in paragraph (1)(B).
            ``(4) Conditions for approval of transfers.--The Secretary 
        may not approve a covered transfer relating to an acquired 
        hospital owned or controlled by a nonprofit entity unless, 
        after completion of the public hearing described in paragraph 
        (6), the Secretary determines that the following conditions are 
        met:
                    ``(A) Due care was exercised by the nonprofit 
                entity in deciding to enter into the transfer, 
                selecting the acquiring entity, and negotiating the 
                terms of the transfer.
                    ``(B) The nonprofit entity sought appropriate 
                expert assistance in making decisions in relation to 
                the transfer.
                    ``(C) The nonprofit entity took all reasonable 
                steps to avoid conflict of interests.
                    ``(D) The nonprofit entity will receive fair market 
                value for its assets transferred in connection with the 
                covered transfer.
                    ``(E) No charitable funds are placed at risk in 
                connection with the covered transfer.
                    ``(F) The amount of any compensation under any 
                management contract entered into in connection with the 
                covered transfer is fair.
                    ``(G) The proceeds to the nonprofit entity in 
                connection with the covered transfer will be used only 
                for appropriate charitable purposes consistent with the 
                entity's non-profit charter and for the promotion of 
                health in the affected community and such proceeds will 
                be controlled as charitable funds independent of the 
                acquiring entity.
                    ``(H) Any charitable corporation established to 
                hold proceeds of the acquired hospital in connection 
                with the covered transfer will be broadly based in the 
                community.
                    ``(I) There are sufficient safeguards to assure the 
                affected community continues to have access to 
                affordable hospital services.
                    ``(J) The acquiring entity has made a commitment to 
                provide comparable care to the disadvantaged, the 
                uninsured, and the underinsured, and to provide 
                benefits to the affected community.
                    ``(K) The acquiring entity has no contractual right 
                to receive or direct future grants in relation to the 
                acquired hospital.
                    ``(L) The acquiring entity has paid the Secretary, 
                with respect to the covered transfer, a fee sufficient 
                to cover the costs of the Secretary in administering 
                this section in relation to such transfer.
            ``(6) Public hearing.--Before approving a covered transfer, 
        the Secretary shall provide for notice and a public hearing to 
        take place in the community of the acquired hospital concerning 
        the transfer and publication of a public report on testimony 
        received at the hearing.
    ``(d) Application of Alternative State Law Requirements.--A covered 
transfer is deemed to meet an applicable requirement of subsection (c) 
relating to the transfer to the extent that the Secretary determines 
that there is a State law that imposes a requirement at least as 
stringent as the requirement involved with respect to the transfer.
    ``(e) Delegation of Authority.--The Secretary may exercise the 
Secretary's authority under this section through any appropriate 
official in the Department of Health and Human Services.
    ``(f) No Effect on Other Rights.--The fact that the Secretary has 
approved a covered transfer under this section shall not supersede 
other rights that any entity (including the federal government or a 
State or local government) may have to challenge the transfer on any 
grounds.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to covered transfers for which agreements or transactions 
are entered into on or after January 7, 1997.
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